Texas Challenge to NLRB Election Rule Fails; Federal Court Finds No Plan to Assist Unions

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By Lawrence E. Dubé

June 2 — A coalition of Texas business groups failed to convince a federal district court that the National Labor Relations Board's amendments to its representation case rules are unlawful or arbitrary, and the court June 1 dismissed the coalition's bid for an injunction to block enforcement of the rule changes.

In dismissing the case, Judge Robert L. Pitman of the U.S. District Court for the Western District of Texas said there was no evidence backing claims that the NLRB adopted the rule changes to favor organized labor.

Pitman also rejected arguments by the Associated Builders and Contractors of Texas Inc. and other groups that the board exceeded its power under the National Labor Relations Act by adopting rule changes that may limit parties from litigating some representation case issues before employees cast ballots on union representation.

The judge observed that “the New Rule grants significant deference to the Board and the Regional Directors in applying the very provisions Plaintiffs challenge.” That fact made it very difficult for the groups to argue that the court should consider the NLRB rule changes invalid on the face of the regulation, Pitman said.

Election Rule Changes Now in Place

The board approved the rule changes (RIN 3142-AA08) in December 2014 on a 3-2 vote. 

The Senate and House disapproved the NLRB regulatory action, but President Barack Obama vetoed their Congressional Review Act resolution March 31, allowing the rule changes to go into effect April 14.

The rule changes require non-petitioning parties in a proceeding to respond to the filing with a statement of position before a pre-election hearing is opened by an NLRB regional office.

Under the amended rules, pre-election hearings are generally to be devoted only to issues necessary to determine whether an election should be conducted. Other issues, including the unit inclusion or eligibility of employees may be deferred to post-election proceedings if they affect a small percentage of a voting unit.

Lawsuit Challenged NLRB Rulemaking

The Associated Builders, joined by its Central Texas chapter and the National Federation of Independent Business/Texas, filed the lawsuit Jan. 13, shortly after the U.S. Chamber of Commerce and allied groups filed another challenge in the U.S. District Court for the District of Columbia (Chamber of Commerce v. NLRB, D.D.C., No. 15-cv-9).

The Chamber of Commerce case is still pending.

The Texas plaintiffs filed a motion for expedited summary judgment in their case, while the NLRB filed its own partial motion to dismiss and a motion for summary judgment. Pitman granted the NLRB motions and denied the business coalition's request for summary judgment.

Court Backs Pre-Election Hearing Changes

The Texas groups argued that the rule improperly restricts employers' ability to litigate threshold issues before a union election, citing new requirements for pre-election hearings.

The challengers argued the new rule is inconsistent with Section 9(c)(1) of the act, which provides for “an appropriate hearing upon due notice” before an election is held.

But Pitman said he “finds significant the language in the New Rule which grants great deference to the Board and its regional directors in conducting pre-election hearings.”

Because the business groups were challenging the NLRB rule on its face, the court said, “even if the New Rule ordinarily limits the timing and scope of the pre-election process, the deference granted a Regional Director to extend and expand those limits renders Plaintiffs' challenge unavailing.”

The court said the plaintiffs had “not pointed to any binding authority which establishes the language of 29 U.S.C. § 159 prevents the Board from requiring the filing of a Statement of Position prior to a pre-election hearing, requires the Board to permit employers to introduce evidence concerning voter eligibility in a pre-election hearing, or prevents the Board from delaying consideration of voter eligibility prior to an election.”

Employee Privacy Argument Rejected

The court also rejected the coalition's challenge to a new rule provision requiring an employer to release information, including the personal phone numbers and e-mail addresses, of employees in connection with an election proceeding.

The challengers said information could be misused by unions, but Pitman said the plaintiffs had not explained how employee privacy would be compromised under the new rule.

He noted the board included a rule provision prohibiting parties to an election proceeding from using voter lists for purposes other than NLRB proceedings.

Facial Challenge on Election Timing Not Viable

Pitman was not persuaded by an argument that the rule change would result in accelerating elections and truncating the time for debate and discussion before a representation election.

The new rule gives regional directors responsibility for setting election dates and instructs them to consider “the desires of the parties, which may include their opportunity for meaningful speech about the election.”

“[O]nce again,” the court wrote, “in light of the fact that Plaintiffs raise a facial challenge to the New Rule, this discretion alone renders it virtually impossible for Plaintiffs to show the election period in every set of circumstances violates free speech.”

NLRB Improvement Effort Not Arbitrary

Pitman said the challengers also failed to show that the NLRB rule changes were arbitrary or improper under the Administrative Procedures Act.

The business groups argued the NLRB disregarded evidence and testimony that its existing representation case rule was working fairly and effectively, but Pitman said that “an agency does not act in an arbitrary and capricious manner by attempting to improve a regulatory scheme,” and the NLRB adopted its rule changes “only after an exhaustive and lengthy process” that included a careful review of the evidence and arguments presented.

Concluding “the Plaintiffs have failed to show the New Rule, on its face, is in violation of the Act or the APA,” the court entered a final judgment dismissing the lawsuit.

Littler Mendelson P.C. represented the business groups. NLRB attorneys represented the board.

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the order is available at http://www.bloomberglaw.com/public/document/Associated_Builders_and_Contractors_of_Texas_Inc_et_al_v_National/2.